Europe stocks fall, investors await Fed rate decision

LONDON, Dec 16 (Reuters) - European shares fell early on Tuesday as investors took caution ahead of the U.S. Federal Reserve interest rate decision and Goldman Sachs (GS.N: Quote, Profile, Research, Stock Buzz) figures, while mining stocks led the losers tracking lower metal prices. By 0814 GMT, the pan-European FTSEurofirst 300 index of top European shares was down 0.2 percent at 825.25 points. The U.S. Federal Reserve is expected to cut interest rates by 50 basis points from the current 1 percent. As rates drop close to zero investors will focus on whether the Fed gives clues on what further easing measures it will take to steer the U.S. economy away from recession.

"While the the Fed will probably cut it is really meaningless at these levels, we are paddling in shallow water and the cut is more symbolic than anything else. Rather the banking system needs to be repaired and banks need to be able to lend again," said Justin Urquhart Stewart, director at Seven Investment Management.

Mining stocks took the most points off the index as copper dropped 1.8 percent and the price of metals retreated.

Xstrata Plc (XTA.L: Quote, Profile, Research, Stock Buzz) was down 2.7 percent as it announced it had shut down half its coking coal production at a mine in Australia.

Anglo American (AAL.L: Quote, Profile, Research, Stock Buzz), Antofagasta (ANTO.L: Quote, Profile, Research, Stock Buzz), BHP Billiton (BLT.L: Quote, Profile, Research, Stock Buzz), Lonmin (LMI.L: Quote, Profile, Research, Stock Buzz), Kazakhmys (KAZ.L: Quote, Profile, Research, Stock Buzz), Rio Tinto (RIO.L: Quote, Profile, Research, Stock Buzz), and Vedanta Resources (VED.L: Quote, Profile, Research, Stock Buzz) were 1.9-5 percent lower.

Banking stocks were heavy weighted losers on the index as investors remained nervous ahead of Goldman Sachs figures. The group is expected to report a quarterly loss of as much as $2.5 billion, hit by the falling value of many of its investments.

Europe's biggest bank, HSBC (HSBA.L: Quote, Profile, Research, Stock Buzz) lost 1.6 percent after it said about 10 percent of its workforce in Taiwan will leave this year as the economy slows and as it integrates a recently acquired local bank.

Swiss bank Credit Suisse (CSGN.VX: Quote, Profile, Research, Stock Buzz) slipped 3.3 percent after the group said it has cut its Japan investment banking workforce by more than half and will suspend its leveraged finance business, a person with direct knowledge of the changes told Reuters.

Across Europe, the FTSE 100 index was down 0.1 percent, Germany's DAX was up 0.3 percent and France's CAC 40 was 0.2 percent higher. (Reporting by Joanne Frearson)

(joanne.frearson@thomsonreuters.com; +44 207 542 2773, ReutersMessaging:joanne.frearson.thomsonreuters.com@reuters.net)